Gretchen's 2015 tax return, due April 15, 2016, was filed on July 15, 2016. Her tax due with the return was $1,200. Gretchen owes a late filing penalty of $180.

Question

Quizplus · Accepted Answer

The late filing penalty for federal income tax returns is calculated as 5% of the tax due per month, up to a maximum of 25%. Since Gretchen filed her return three months late (July 15 instead of April 15), she incurs a late filing penalty of 15% (3 months x 5%). 15% of $1,200 is $180, so the statement is true.

Gretchen's 2015 Tax Return, Due April 15, 2016, Was Filed